Grains traded mixed overnight with beans lower.
Grain futures were lower most of the evening with strength resurfacing in wheat, with French milling wheat overnight pushing to new September highs, and corn futures firming on the crude oil push back to the continuation price highs near 77.00. Strength in the US dollar is noted with the 10-year treasury yields rising above 1.5% overnight, putting pressure on stock equity valuations.
Yesterday's crop reporting data showed that harvest is at 18% on corn and 16% for soybeans. Harvest progress is active across the Midwest, but farmers are not showing much interest in across the scales sales. Instead, most farmers are delivering against existing sales or heading newly cut corn and soybeans into on-farm storage. Farmers vividly remember last year's price rally to the winter, with this year's scenario of increasing demand and reducing crop sizes potentially repeating. Additional soybean sales are anticipated to China today through the week, with China's Golden Week holiday just ahead.
The US harvest is making fast progress. In early October, seasonal price trends turn upwards for corn and soybeans, and CBT open interest rests at a four-year low. The big question is, will hedge funds return to the CBT grain markets amid rising inflationary fears and the ongoing shortage of fertilizers? Wheat charts have turned up, with corn close to confirming bottoms, while soybeans still languish under technical resistance at 1308-1311.
A US government shutdown is at risk for this Friday, as the political landscape is deeply divided with the upcoming debt limit needing to be raised this week along with Pres. Biden's multi-trillion dollar continuing goodie package all put into limbo. The USDA crop report on September 30 will be released, but if the government goes into shutdown on Friday, October 1, it's possible the October 12 crop report and all other USDA weekly data will be halted for release at a later date.
The weather pattern is extremely warm for the next two weeks. A ridge of high pressure maintains its position across the Plains and pulses north and east into the end of the week. Gulf moisture pushes northward late week and allows showers across the Plains and W Midwest into October. This is favorable for rain in the Plains, but the models have the heavier totals being farther east than prior runs. Plain's rainfall totals are estimated in a range of .4-1.50″ with locally heavier amounts. The rains are needed for wheat seed germination. The Midwest will be dry with high temps ranging from the 70's to the upper 80's this week. The summerlike warmth and the dry weather will maintain a fast harvest pace. Rains and harvest slowdowns start on the weekend. Rainfall totals range from .25-1.25″. The forecast is wetter in the week two period.
Cattle futures opened lower yesterday, and after a brief recovery in the live cattle market, they still closed lower with feeder cattle sharply lower on the strength in the corn market. Boxed beef values continue to deflate, though momentum on the decline has begun to slow. The choice cutout value was down $.62 on Monday, and select was down $1.5. The choice/select spread narrowed to a $28.32 choice premium. Weekly beef sales continue to recover, with total sales last week reaching a nine-week high of 288 Mil Lbs. Export sales led the increase and were the highest since late July. In addition, estimated slaughter margins are more than double last year and near-record high for late September creating the anticipation the cash outlook this week will be near steady.